Pre-Approval Letter: Pre-Approval Versus Pre-Qualification

A pre-approval letter is extremely important due to the fact that it is a great predictor that you will close on your residential mortgage loan whereas a pre-qualification is a mortgage loan originator’s prediction that the likelihood of you getting a mortgage approval is good.  Most real estate agents require that you are armed with a pre-approval letter before they will show you a property or let you make a written real estate purchase offer.

Pre-Approval: What Is A Pre-Approval And How Do I Get A Pre-Approval Letter From A Mortgage Lender?

Pre-approvals are when a mortgage lender reviews the mortgage loan borrower’s assets, debts, credit report, credit scores, debt to income ratios, and income and determines the maximum he or she qualifies for.  The mortgage loan officer may require to review the borrower’s tax returns and 1099’s if they are self employed or own their own business to make sure that the income they are declaring after writeoffs will qualify them.  For mortgage loan borrowers with challenged credit scores or credit history or borderline debt to income ratios, the mortgage loan originator will most likely run the borrower’s mortgage application through Fannie Mae’s Automated Underwriting System to make sure they get an approve/eligible per DU FINDINGS prior to issuing a pre-approval letter.   A mortgage loan originator can issue a pre-approval letter in a matter of less than an hour.  Once a home buyer is armed with a pre-approval letter, he or she can go and make an offer to purchase a home.

Pre-Qualification: What Is The Difference Between Pre-Approvals And Pre-Qualification?

A pre-qualification is less formal than a pre-approval where the mortgage loan officer will just pre-qualify you whether you qualify for a mortgage loan.  The loan officer may ask you your gross monthly income, your credit scores, whether you have a prior bankruptcy and/or foreclosure, your monthly debt, your assets, and may pull a soft credit check.  Most realtors do not give any weight on pre-qualification letters and will most likely request a pre-approval before you can view homes and enter into a real estate purchase contract.

Importance Of Are-approval: Why Do I Need To Get Pre-Approved Instead Of Pre-Qualified?

A pre-approval will determine how much of a home you can buy and what mortgage amount you qualify for.  I will also determine how much down payment you will need including closing costs.  A pre-approval will also tell you how much your monthly mortgage payments will be.  Almost all realtors will not show you a home unless you have a valid pre-approval letter from a mortgage lender and sellers will not entertain any offers that you might offer.  A pre-approval will determine what the term and the rate of your mortgage will be.  For those who do not qualify for a pre-approval, your mortgage loan officer can help you with your credit so they can qualify in the very near future.

Pre-approval letters issued 7 days a week:  Mortgage loan programs available in Illinois, Florida, Wisconsin, Indiana, and California

If you are a home buyer or realtor in Illinois, Florida, Wisconsin, Indiana, or California and need a pre-approval right away, please contact me at 262-716-8151 or at www.gustancho.com .  I issue pre-approvals 7 days a week and am available any time.  I represent dozens of wholesale mortgage lenders, many of them with no mortgage lender overlays and as long as the borrower can get an approve/eligible per DU FINDINGS, the mortgage loan will close and it will close on time.  I also specialize in FHA Back to Work Extenuating Circumstances due to an economic event in Illinois, Florida, Wisconsin, Indiana, and California where the waiting period for a borrower with a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale is shortened to a one year waiting period as long as the borrower has been unemployed or underemployed for a least six months prior to the initiation of the bankruptcy, or foreclosure.  These are manual underwriting and a one hour HUD approved housing course is required by the borrower 30 days prior to submitting the official mortgage application.  Minimum credit scores for a 3.5% down payment mortgage loan is 580 FICO and open collections and prior bad credit is acceptable as long as the borrower has been timely on his or her monthly credit obligations for the 12 months.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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